If you’ve decided to buy a home, it’s important to step into the process knowing all of the costs involved. Here’s an overview!
- Mortgage application;
Lenders may charge a mortgage application fee, which will vary depending on the lending institution.
- Mortgage insurance;
The federal government requires high-ratio mortgages (with less than 20% down payment) to be insured against default. The cost ranges between 1.25% to 3.75% of the mortgage amount which is added to the mortgage principal.
- Appraisal fees;
Before your lender approves your mortgage, you may be required to have an appraisal done. Sometimes your lender will cover this cost; if not, you are responsible. The fee ranges and is typically as much as $300.
- Land survey fees;
Lenders may require a survey of the property. Survey costs vary.
- Home inspection fees;
A home inspection is a report on the condition of the home that can alert you on any potential issues such as structural and moisture problems, as well as electrical, plumbing, roofing and insulation. Fees can range from $500 – $700 depending on the size of the home and the complexity of the inspection. Some inspectors have surcharges for a secondary suite, a crawlspace, over even an older home.
- Goods and Services Tax (GST);
G.S.T. is payable on the purchase price of newly constructed or substantially renovated residential homes. Substantially renovated is defined in the legislation as the removal or replacement of most of the house construction components, except the foundation, external walls, interior supporting walls, floor, roof and staircase. The tax rate for GST is 5%.
A GST rebate equivalent to 36% of the GST paid is available for new homes priced up to $350,000 and a partial rebate on new homes priced up to $450,000.
Buyers will also pay the GST if payable on services such as appraisals, home inspections and survey fees.
Calculate Your GST
- Provincial Sales Tax;
The PST is generally not payable on services, except for legal and notary fees.
- Property Transfer Tax;
Both the GST and the Property Transfer Tax are payable at the time the property is registered at the Land Titles office. The rate is 1% on the first $200,000 and 2% on the remaining balance. 3% on the portion of the price over $2,000,00. PTT is not calculated on the GST component of the price, for sales where GST applies.
- Property taxes;
Some lenders require property buyers to add property tax installments to monthly mortgage payments.
- Pre-paid property taxes or utility bills;
A buyer typically is required to reimburse the seller for any pre-payments.
- Mortgage life insurance;
If the owner dies, this type of insurance will pay off the balance owing on their mortgage.
- Fire and liability insurance;
Most lenders require property buyers to carry fire and extended coverage insurance and liability insurance.
- Home insurance;
Buyers will be required to purchase home insurance by the mortgage lender. To be safe, make the insurance effective on the earlier of either the completion date or the date that you pay the balance of the funds in trust.
Most lenders also require property buyers to carry fire and extended coverage insurance, as well as liability insurance.
- Legal or Notary Public fees;
Legal or notary public fees and expenses will likely apply to assist with drafting documents and ensuring the title of the home is transferred properly and without incidents.
- Moving fees;
Moving fees vary depending on the distance moved and whether professional movers do all of the packing.
- First Time Home Buyers Exemption;
There is a rebate for qualifying first-time buyers of homes priced up to $500,000 maximum rebate is $8000.00. If two people buy a home together and only one is eligible for the First Time Home Buyers’ Exemption, then PTT will be charged proportionally to their ownership shares. Purchasers claiming the First Time Home Buyers’ Exemption must live in the home for at least the first year after purchasing the home.
- Newly Built Home Exemption.
The purchaser is not required to be a first time home buyer to qualify for the Newly Built Home Exemption.
Purchasers buying a newly built home pay no PTT on homes with a purchase price of $750,000 or less, but they pay full PTT on homes with a purchase price above $800,000. Purchasers claiming the Newly Built Home Exemption must live in the home for at least at least the first year after purchasing the home.